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Is This the End of Analytics?

by SAP's Doug Merritt | SAPinsider

July 1, 2005

Traditional analytics -- after-the-fact reporting disconnected from the rest of business operations -- are giving way to a new generation of role-based, scenario-specific analytics that are tightly embedded with core applications. Doug Merritt, Senior Vice President and General Manager of Suite Optimization and Program Office at SAP, discusses how SAP Analytics, powered by SAP NetWeaver, will bridge the analytical gap and deliver real-time, actionable insight to intelligently guide your decision making.

Doug Merritt
Executive Vice President and
General Manager of Suite Optimization
and Program Office,


Q. Our readers may think it odd that, in an issue devoted to analytics, we are leading with an article questioning their demise. But isn't it true that SAP's vision is that "analytics" as something separate from transactional applications such as ERP will disappear?

It will become increasingly difficult to sustain an independent category called analytics. Ultimately the purpose of business process automation applications is first to automate business processes to make them more efficient, but then to extend that technology to provide users with guidance and better insight into decision making.

The automation side historically has been so difficult to achieve that there hasn't been as much attention given to applying those core transaction applications to decision making. As a result, this separate application category arose called "analytics."

But now that the automation portion has been mastered, analytics will evolve to become tightly embedded with the core applications that house the bulk of data you need to illuminate your business and guide your decision making. Intuitively it makes sense; these are not separate applications, but one intelligent, dynamic business process.

Q. So this will be across the board? You're talking about embedded analytics for CRM, for logistics, for finance, for every application within the business suite SAP offers?

At the end of the day, it's almost impossible for me to imagine a business process that will not include a component for facilitating business decision making. Logistics optimization, for example, by its very nature sounds like an analytic application, even though a lot of elements are transactional. Typically the reason a company focuses on logistics is to make sure it is collapsing time — between product shipment to delivery, or from raw material request to manufacturing. But the key element we're really trying to drive toward is ensuring that companies are making the most intelligent deliveries, the most cost-effective deliveries, the highest-value deliveries. It's natural — any automation process goes through the series of steps of trying to get the kernel automated, and then continuously layering more and more value on top of that kernel. That's why analytics coming front and center is a natural outgrowth of any of these applications.

When I think about what's necessary to manage a business process, historic analysis and future forecasting are two of the key elements that any business manager or user needs to help drive the business in the appropriate direction. If I'm a sales executive working with the sales force automation module set, for example, a piece of that application must be able to: give me information on what has happened over the time period I'm interested in seeing, use that information to simulate a model of what might happen in the future, and extrapolate what actions I can take to accelerate the good outcomes and avoid the negative ones. And that's why wholly separate application items are really difficult, because the core flow of thought, data, approval, and process is so incredibly intertwined from initial conception —"I need something done" — through the execution and completion of that task.

Q. So SAP will be embedding analytics into its offerings?

We've already got a large number of analytic capabilities within our offerings. Within each of our transactional applications there's a significant amount of analytic capacity. The focus at SAP over the next few years will be to more aggressively tie together the analytics embedded within each one of these applications, to provide comprehensive visibility for business processes that almost always span multiple applications, and to call out to those composite, cross-application, or cross-industry analytics as a much more usable, workable, and deep offering from SAP.

Q. What are the common questions you're getting? What are the challenges to get customers to start adopting analytics?

The biggest things I've consistently heard about analytics are two-fold. One, similar to what I hear about most software applications, is how do we make them more user-friendly, more engaging, and more relevant? And this is not specific to SAP Analytics — this is more or less across the board. And two, how do we make them more adjustable, configurable, and changeable so that as my business goes through minor iterations, and as my own understanding of my business challenges and opportunities becomes clearer, I can easily — without having to go back and re-architect core data stores or do traumatic and heavy programming — get revised analytic insight and information quickly in front of me?

The trick to more user-friendly analytics is to make the user interface — literally the elements on the screen — fun, colorful, and exciting. You want to draw people into the analytic application itself. Our next generation of analytics, which will launch in late 2005, looks highly interactive and inviting.

Figure 1
SAP Analytics for Financials — Credit Management

But not only must the interface be engaging, the analytics it displays must be appropriate to the audience. SAP is very focused on tailoring analytic applications to both end-user roles and the specific scenarios or situations where users would open up these applications and work with them. we're also making sure the analytic applications are functionally elegant and crisp. There shouldn't be one extra element or piece of data on the screen that's not needed.

These challenges are hard to solve, and they span the many different layers of a typical analytic offering. That is, how do you make sure you have the right data to draw analytics from? How do you ensure that you have the right algorithms to power the most effective answers for your end users? How do you ensure that your screen elements are as engaging as possible? With our fall analytics release, we are delivering analytics with our Visual Composer tool, which very elegantly delivers on the latter two challenges by providing a services-oriented, model-driven application development environment.

SAP NetWeaver is the platform that enables this next generation of analytic applications, enabling more dynamic data integration from non-SAP and SAP sources, enhanced information broadcasting, and innovative planning and simulation capabilities, as well as continued improvements in ETL, reporting, and Microsoft Office integration. SAP NetWeaver powers SAP Analytics.

Q. We've heard from SAP customers who think these analytics are wonderful, but they're intimidated at the same time, out of fear that the implementations would be too complex. If I'm an SAP customer who wants to get into analytics, what reassurance can you provide my team, and how do you suggest I get started?

What makes analytics so complex for people is that most organizations have multiple systems that house lots of different data sets, and historic analysis and future forecasting are dependent upon lots of data from many different sources. There's been huge investment over the last 20 years around data marts, data warehouses, InfoCubes, OLAP engines, and tons of underlying technologies to gather the appropriate data and make sense of it - so you can give users an interface that will enable them to take appropriate action. Today, most of that technology has matured to the point where it's highly useable by IT shops, and companies such as SAP have been investing heavily to advance that technology.

From my perspective we're finally at a point where, given the state of technology and the much more advanced thinking on data, components, and the interfaces between them, we can now provide a very easy-to-use and compelling set of analytic tools on top of this architecture. And I think that it's back in the vendors' hands to provide very simple, specific, and useful

Figure 2
SAP Analytics for Financials — Blocked Order View

analytic applications that are highly scenario-based, so they are non-intimidating to our users. We desperately need our customers and third-party partners who can bring intellectual and physical bandwidth to continue to map out the large number of role-based, scenario-based, and domain-based forecasting and what-if questions to make more intelligent business decisions, not just make processes more efficient.

So whether it's the CEO trying to run their business better, whether it's the head of plant manufacturing trying to understand how to run the plant more efficiently, whether it's the individual sales rep trying to figure out which deal he or she should be working on to maximize revenue for this quarter, there are a lot of gaps in information now that need to be filled by simple, what-if, question-and-answer-type formats. And the difficulty is that, to really fill this value, analytics have to be extremely role-based and scenario-specific.

Q. So, is this the end of analytics?

This is the end of the static, after-the-fact reporting disconnected from the rest of the business operations, the end of tools that force business users to become "human integrators," the end of applications that do not understand the context of business — but this is not the end of analytics.

SAP Analytics deliver on our vision to empower business people with actionable insights presented at the right time in the right format to guide the right actions. SAP Analytics usher in the next generation of composite business applications, which seamlessly integrates analytic, collaborative, and transactional steps. SAP Analytics are one of the many "IT Powered Innovations" SAP is delivering to our customers and partners.

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